tag:blogger.com,1999:blog-5882645467378797266.post1331945849625138366..comments2023-07-17T11:55:51.363+02:00Comments on ObservingGreece: Responsibility For Greece's Collapse In 2009-10kleinguthttp://www.blogger.com/profile/12491174042954678023noreply@blogger.comBlogger39125tag:blogger.com,1999:blog-5882645467378797266.post-49469682034016878462018-01-22T12:23:31.824+01:002018-01-22T12:23:31.824+01:00Comparison of the money transfer policies of the E...Comparison of the money transfer policies of the EZ and the 2 federal states of Germany and the USA may be interesting. But when all is said and done, Greece signed up for membership of the EZ.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-90845832128536361712018-01-21T13:58:37.950+01:002018-01-21T13:58:37.950+01:00The Italians have it 100% right:
"All view t...The Italians have it 100% right:<br /><br />"All view the euro system as a racket run largely in the interests of Germany."<br /><br />Amen.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-37130995993203917342018-01-19T18:52:30.284+01:002018-01-19T18:52:30.284+01:00@Anonymous 9:54 AM
1) Because Greece had by far t...@Anonymous 9:54 AM<br /><br />1) Because Greece had by far the highest debt to GDP ratio. The only other EMU member that came close is Italy, but Italy is too big to fail.<br /><br />2) Whether transfers are unpopular is irrelevant. They are a necessity for the proper functioning of a monetary union. Indeed, you could say that every country is a monetary union of sorts, and poor areas are subsidized through taxation and redistribution, yet nobody complains because of national solidarity.<br /><br />3) The policies imposed are ineffective, internal devaluation has proven to be ineffective (look at Greece's tax arrears), the Eurozone continues to be ineffective, other than the exorbitant privilege that the Northern countries continue to have (cheap currency that boosts their exports and surplus accumulation), a characteristic which gives them real power over the deficit EMU members.<br /><br />4) No, Greece can't do that, it can't unilaterally re-denominate it's public debt (which is now owed to official creditors) to drachma. Greece didn't even do that when it had the chance in 2010 (when it's debt was owed to private creditors and was under the jurisdiction of Greek law) because of heavy European intervention.Jim Sliphttps://www.blogger.com/profile/15325962115410722474noreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-63791154724516188042018-01-19T17:07:01.900+01:002018-01-19T17:07:01.900+01:00Addendum: USA states get transfers in the form of ...Addendum: USA states get transfers in the form of taxation and redistribution (i.e. rich California is taxed and poor Alabama gets benefits), and in the form of federal integration (i.e. they don't have to pay for defense etc). Also, their financial system is federalized, whereas the Eurozone has failed to introduce even a common deposit-insurance scheme because of constant bickering among the member states.Jim Sliphttps://www.blogger.com/profile/15325962115410722474noreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-49066039321492581682018-01-19T16:30:47.097+01:002018-01-19T16:30:47.097+01:001) Obviously the foreign official creditors would ...1) Obviously the foreign official creditors would have to agree to redenominate Greece's debt to drachma. Sadly, the issue is out of Greece's hands. Greece should have declared bankruptcy when it's debt was privately held and under Greek law (i.e. prior to the bailouts).<br /><br />2) Redenominating to drachma is a better option for all involved, much better than imposing/ accepting haircuts.<br /><br />3) Not agreeing to redenomination basically amounts to forbiding Greece to exit the EMU. Greece's public debt is now 180% of GDP. Foreign creditors would never agree to big haircuts, ergo Greece's public debt would still exceed 120% of GDP and remain denominated in strong foreign currency. This equals to forbiding Greece to exit the monetary union. Therefore we can blame the EZ for taking this stance.<br /><br />4) Greece's debt would be totally irrelevant if held domestically and denominated in drachma. Japan proves as much. If necessery, the central-bank buys the bonds and extends maturities to the second coming. Interest rates are irrelevant because the central back refunds them to the government. Therefore all that is left to do is managing the economy according to some basic standards, i.e. keeping the current-account in check, controlling import demand, maintaining a grip on inflation, intervening to the exchange-rate in order to balance trade/ inflation differentials etc. Greece did this prior to joining the euro, which is why it is in no danger of collapse, hyperinflation etc.<br /><br />6) In a monetary union, transfers between the rich and poor areas *are* necessary in order to balance the advantage that rich areas get (too weak currency) and the disantvantage that poor areas get (too strong currency). Like I said, what form these transfers take (interbank lending, fiscal transfers, central-bank buying of local bonds, taxation and redistribution) is irrelevant. Once the Eurozone does this it will become viable, but the Northern countries refuse it.<br /><br />7) Yes, the conversion of Greece's liabilities to euro bankrupted Greece. With 120%/ GDP public-debt being denominated in strong foreign currency, the markets are going to have a run on your bonds during the first international downturn. Which is exactly what happened.<br /><br />8) No, the euro never made Greeks privately rich, apart from maybe a small period of time (2002-2008) when house prices were on the rise. But like with any boom, timing is of the essence. Whoever sold his house back then made good money, whoever didn't is now left with a depreciated "asset" for which he pays high taxation.Jim Sliphttps://www.blogger.com/profile/15325962115410722474noreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-2802125568734397382018-01-19T16:22:18.996+01:002018-01-19T16:22:18.996+01:00@kleingut:
Quote: "Greece, as a developing ec...@kleingut:<br />Quote: "Greece, as a developing economy, needs current account deficits. The question is only: are those deficits caused by consumption or by investment?<br /><br />Serious question: When did the PRC ran a substantial current account deficit the last time? All I could find was data running back to the year 2000 and in this period they never had any current account deficit. And the PRC is (still) a developing country, right?<br /><br />UrsAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-30729105027806992092018-01-19T11:03:02.254+01:002018-01-19T11:03:02.254+01:002 of 2As I said: foreign transfers are necessary f...2 of 2As I said: foreign transfers are necessary for a developing economy like Greece. Throughout the world, when developing economies require foreign transfers, they make every effort to attract foreign investment. If for no other reason because they don't have the luxury of Greece as being a recipient of EU-subsidies, EU-loans and ECB-funding via target2. <br /><br />Ponder this: since joining the EU, Greece's EU-subsidies exceeded 200 BEUR! Google Wikipedia to see how that compares with the Marshall Plan.<br /><br />States of the USA do not receive fiscal transfers, as far as I know. They need to finance state expenses via state revenues and/or state debt, just like EZ-members. The Constitution prevents the federal government to bail out states. If a state becomes uncompetitive, its population moves elsewhere to an important degree. That's considered normal.<br /><br />If the state of Illinois becomes insolvent, it needs to sit down with its creditors and negotiate a solution. That's exactly what should have happened with Greece. It didn't happen with Greece because the Euro-system was so fragile at the time that everyone was worried about contagion (and failures of large banks) and got cold feet. I once called that the Original Sin of the Eurozone.kleinguthttps://www.blogger.com/profile/12491174042954678023noreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-16116553809907329092018-01-19T11:02:21.279+01:002018-01-19T11:02:21.279+01:00@Jim Slip 1 of 2@Jim Slip
I generally find your co...@Jim Slip 1 of 2@Jim Slip<br />I generally find your comments challenging even if I do not always share your views. Above, however, you went off the charts. Here are just a couple of basics.<br /><br />1) Most of Greece's debt is now governed by foreign jurisdictions. Thus, it is impossible for Greece to re-denominate this debt if it were to return to the Drachma. All Greece can do in such a case is to plead for mercy, to argue that if the debt wasn't sustainable before, it is even less sustainable after the Grexit. And it's a given that, in case of Grexit, the creditors would forgive much of the Euro-debt (Schäuble often indicated that; the media referred to this als the 'alimony'). I guess that's what you meant, too, except that you put it into totally wrong terms. If, after a Grexit, Euro-creditors subject to foreign laws refused a haircut (wouldn't make sense), Greece would remain on the hook for Euro-debt until doomsday. And while the creditors will be willing to make (major) haircuts, I doubt that they would be willing to redenominate the remainder into Drachma (in fact, I am sure they wouldn't). There is nothing unusual about a local currency country to have foreign currency debt.<br />2) I don't see how you can blame the EZ for not allowing Greece to exit the EZ when published records now confirm that not only Schäuble but several other countries promoted a Grexit, even more forcefully than Schäuble.<br />3) To state that the size of Greece's debt, if denominated in Drachma and if held domestically, would be irrelevant defies your intelligence. Yes, people between Paris, Brussels, Frankfurt and Berlin would have remained relaxed observers because they would not have been touched by the crisis very much but people within the borders of Greece would have been in panic: the value of their local currency assets would have been wiped out through inflation and/or a currency reform.<br />4) The conversion of Greece's liabilities to Euro bankrupted Greece? C'mon! Greece's assets and, above all, revenues were also converted to Euro. Or do you really think that there would be as much Euro financial wealth among the wealthier Greeks today if Greece had stuck to the Drachma? On balance, the Euro made Greeks privately rich: some, a smaller portion, very rich but, regrettably, others, the suckers, rather poor. On balance rich, though. After all, about 350 BEUR (net) flowed into the country from 2001-10 and not all of it left the country in the form of a current account deficit (which accumulated 199 BEUR). So there are now billions and billions of Euro financial wealth in Greece (and mostly outside Greece) which would not be there under a Drachma. And the origin of that wealth is mostly foreign debt, which debt now mostly represents tax payer money. So foreign tax payers are behind the above wealth of the wealthier Greeks. If someone had planned that system 20 years ago, he would be worthy of a Nobel Prize (in negative terms).<br />5) Transfers: no cross-border transfers are ever necessary if a country lives within its external means (i. e. balanced current account). If a country runs massive current account deficits, transfers from abroad are a mathematical consequence. One could also argue that is is the other way around: foreign capital transfers trigger the current account deficit. In reality, it is probably a combination of the two. Greece, as a developing economy, needs current account deficits. The question is only: are those deficits caused by consumption or by investment? If Greece had used its current account deficits only partially for investment, Greece would be in great shape today. kleinguthttps://www.blogger.com/profile/12491174042954678023noreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-44787788543297535692018-01-19T09:54:33.525+01:002018-01-19T09:54:33.525+01:00@Jim Slip:
Sorry but again it’s rather you who mis...@Jim Slip:<br />Sorry but again it’s rather you who misses the point: <br />1) All EMU countries had their debt denominated in EUR after they joined the EMU. So why did not all countries got into trouble? So indeed it is very important how Greece became "a country like Greece". And why was especially Greece politically isolated and did not receive any "help" from other fellow "Southerners"? Greek politicians were very eager to join the EMU (remember, they went so far to cook their books and they knew the rules and regulations of the club they joined). Pray tell me why? <br />2) It is by no means irrelevant how money flows from functioning economies to the non-functioning. You may ask voters in rich countries what they think of fiscal transfers. Even I (not living in an EMU member state) can tell you that they are not popular at all. <br />3) Yes, the majority of EMU member states impose indeed specific policies to the countries they saved from bankruptcy. And these policies are not popular in Greece. They had to do that because the political class in Greece is not able to do what it takes to devaluate internally (outside a sovereign default).<br />4. Greece could leave the EMU (and possibly the EU), tell it’s creditors go whistle and redenominate it’s debt to a New Drachma thus inflating their debt away in no time. Have you ever asked yourself why on earth more or less nobody in Greece is even considering to go this way?<br /><br />UrsAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-43867909104824994012018-01-19T09:50:27.179+01:002018-01-19T09:50:27.179+01:00@ Jim Slip.
I suppose that if your attention span ...@ Jim Slip.<br />I suppose that if your attention span only allows you to read parts of a 10 page document then everything become lopsided.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-47057500006075233082018-01-18T21:31:14.975+01:002018-01-18T21:31:14.975+01:00From the Telegraph:
"Italy’s ascendant popul...From the Telegraph:<br /><br />"Italy’s ascendant populists on Left and Right have shelved their immediate plans to leave the euro. They are plotting instead to subvert monetary union from the inside with parallel currencies and deficit spending in open violation of the Maastricht Treaty.<br /><br />This is equally dangerous for Germany and for the political construction of Europe, and is far more likely to happen. <br /><br />The rebel forces jockeying for power in the elections on March 4 currently lead the polls by a wide margin. Between them they command two thirds of the electorate. All view the euro system as a racket run largely in the interests of Germany. They intend to fight back by gaming the EU themselves with matching cynicism and Machiavellian "astuzia". <br /><br />The eurosceptic revolt should come as no surprise. Economic recovery in Italy is a relative term. Output is still 6pc below the pre-Lehman peak. The tangible reality for most Italians is even worse since real disposable income per capita has not yet returned to the levels of 1995, when the lira was fixed in perpetuity against the D-Mark. A quarter century of depression explains why the pro-European centre is withering on the vine."<br /><br />Bye, bye Germany. Hope you choke.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-38149097213072648032018-01-18T19:55:46.361+01:002018-01-18T19:55:46.361+01:00"As the saying goes if you have only a hammer..."As the saying goes if you have only a hammer every problem becomes a nail."<br /><br />Funny you should have said that! As for Hatzis he is equally anxious to downgrade what the EU-entry meant per se and he'll say anything to achieve this. It maybe is music to your ears but, for its major part, it doesn't make it anything more than trite moralizing. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-4298659618179750502018-01-18T19:48:49.621+01:002018-01-18T19:48:49.621+01:00If only you understood what you've written, yo...If only you understood what you've written, you would have kept quiet... But then again maybe not...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-77860233300168834032018-01-18T17:44:31.236+01:002018-01-18T17:44:31.236+01:00@Anonymous 10:05
You are missing the point in all...@Anonymous 10:05<br /><br />You are missing the point in all the points that you raise. It doesn't matter why Greece became how it is. What matters is that it's domestic debt became external debt overnight, which is what effectively bankrupted it. As for fiscal transfers, nobody said they're the same as interbank lending. However, in a monetary union, it is a necessity that money flows from the rich areas to the poor areas. What form these flows take (interbank lending, fiscal transfers, central-bank buying of local bonds, taxation and redistribution) is irrelevant. What is relevant is that the Northern countries not only refuse to do so, but also use this EMU characteristic in order to impose specific policies to the Southern countries. As for redenominating a country's debt in it's new domestic currency once it leaves the EMU, I don't see why not. Similar to how the domestic debt of Greece became external and denominated in a foreign currency overnight, it's only just that the same happens once the reverse procedure takes place.<br /><br />Your arguments are as lopsided as Hatzis' analysis.Jim Sliphttps://www.blogger.com/profile/15325962115410722474noreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-26540106164058430092018-01-18T15:58:09.237+01:002018-01-18T15:58:09.237+01:00There we go. The evil Savvidis-German money at wor...There we go. The evil Savvidis-German money at work. Not to mention the Fraport fiasco with the Thessaloniki airport:<br /><br />http://www.kathimerini.gr/943887/article/oikonomia/epixeirhseis/xrhma-xrono-kai-pelates-xanoyn-oi-e3agwgeis-sth-8essalonikhAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-62421508796382401452018-01-18T14:57:32.996+01:002018-01-18T14:57:32.996+01:00Urs:
This is cheap German propaganda you are repr...Urs:<br /><br />This is cheap German propaganda you are reproducing. Greece should have never joined the eurozone because it was not and still it's not in its best interest to join a free trade zone so that can be inundated with german exports (the opium of today's Europe). Let's get this right and spare me the rest of your crap.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-88167223289986341482018-01-18T11:49:56.232+01:002018-01-18T11:49:56.232+01:00@ Jim Slip,
Lopsided? No balanced. I enjoyed re-re...@ Jim Slip,<br />Lopsided? No balanced. I enjoyed re-reading it.<br />Your suggestion would reinforce Greece's belief that for her to venture something is, and should be, risk free. Others will always, and should, cover possible losses.<br />It would be akin to the roulette gambler doubling his bets every time he plays, and when he hits the limit with a loss of a million, the management gives him the money he had when he came in, and bid him "a pleasant evening, and we hope to see you again Sir".<br />On the other hand, if he hit the limit with a gain of a million, the management gives him the money he has won, and bid him "a pleasant------". <br />Lennard.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-47341482185464979252018-01-17T22:05:24.561+01:002018-01-17T22:05:24.561+01:00@ Jim Slip:
1) Hatzis paper is deep and broad and ...@ Jim Slip:<br />1) Hatzis paper is deep and broad and goes far beyond the 2008 financial crisis. I assume that it is rather your limited focus that lets you perceive it as severely lopsided. As the saying goes if you have only a hammer every problem becomes a nail. You rightly state that a "country like Greece" should never have been allowed to join a currency union and that the ammount of external vs. domestic debt played a crucial role in how hard the countries of the EZ were hit by the 2008 crisis yet Hatzis explains how Greece became "a county like Greece" in the first place. <br />2) Fiscal transfers are something completely different than the interbank lending market - at least in a currency union of otherwise sovereign nation states.<br />3. If the (sovereign) debt of Greece would be re-denominated in a new Drachma creditors would have to write-down their receivables substantially. They may have to do this anyway but why should they hide this behind a re-denomination. Besides, why do you think even Tsipras and most of his followers do not even consider to leave the EZ?<br /><br />UrsAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-55709353377872617832018-01-17T18:22:43.014+01:002018-01-17T18:22:43.014+01:00Excellent as usualExcellent as usualAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-48019845097616448172018-01-17T18:19:02.195+01:002018-01-17T18:19:02.195+01:00ELPE is owned by the government and it's offer...ELPE is owned by the government and it's offered for sale. Why don't you buy it with the idea that you have to increase the purchase price due to the hidden income potential as you claim?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-16664331077016791312018-01-17T15:53:30.908+01:002018-01-17T15:53:30.908+01:00I read parts of Prof. Aristides Hatzis' analys...I read parts of Prof. Aristides Hatzis' analysis and found it to be severely lopsided. I am not one to argue against Greece's ineffective governance, but I am not one to join the chorus against public debt either.<br /><br />The fact remains, before Greece joined the EMU, it's public debt was primarily (70%) issued in drachma and held domestically. Therefore, despite it's large size (120% of GDB), it makes it irrelevant. Let me say it again, irrelevant. Transforming that debt overnight into debt denominated in foreign currency effectively bankrupted Greece from the moment it joined the Eurozone. The international downturn of 2008 just made it official.<br /><br />Does that negate Greece's poor governance and general bad economic performance? Of course it doesn't. But it also doesn't change the fact that a country like Greece should better stick with monetary sovereignty.<br /><br />Considering the Eurozone won't change it's clothers, and by that I mean that the Northern countries won't allow for fiscal transfers to replace the transfers of the interbank lending market that broke down in 2008, it should at least allow for countries to exit the EMU should they choose to do so. In order for that to happen, their public debt should be re-denominated in their domestic currency. Insisting that it remains denominated in euro, effectively forbids them to leave the EMU, therefore perpetuating their economic misery.Jim Sliphttps://www.blogger.com/profile/15325962115410722474noreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-17685433441470533112018-01-17T09:33:35.082+01:002018-01-17T09:33:35.082+01:00@ Anonymous 1443-1459-1502 hours.
Is anybody stopp...@ Anonymous 1443-1459-1502 hours.<br />Is anybody stopping ELPE from, on behalf of the government, taxing all oil in full at the gate? The end user can then claim a tax return when he has proved beyond reasonable doubt that he is entitled to it. That is how tax and VAT systems work in many countries.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-23363843356976197062018-01-17T08:54:16.241+01:002018-01-17T08:54:16.241+01:00So you don’t dispute what Spiegel is reporting you...So you don’t dispute what Spiegel is reporting you just don’t like the fact that they are covering Syriza’s voter buying. <br /><br />UrsAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-72643137129989550042018-01-16T15:02:46.429+01:002018-01-16T15:02:46.429+01:00In other words, Greek authorities need a mechanism...In other words, Greek authorities need a mechanism that should effectively use technology and<br />develop the existing regulations designed to crack down “black money laundering”. To this end,<br />certain regulations that could tackle this problem are listed below:<br />1) The establishment of an electronic system that controls the inflows and outflows of the fuels’<br />volume during all the phases of oil’s transfer.<br />2) Continuous controls on the petrol stations in order to investigate all potential mechanisms of<br />pumps’ fraud and insufficient delivery to the consumers<br />3) The installation of GPS’s systems on fuel transport vehicles in order to observe the routes that<br />the tankers or the trains follow for the importation or exportation of the products.<br />However, despite the utility and the potential effectiveness of these measures, the political<br />determination to take efficacious action against fuel smuggling is the main prerequisite.<br />Combatting oil smuggling should be upgraded as one of the top priorities for the IMF and the<br />European lenders instead of their stubborn concentration on the simplified and fruitless so far<br />application of the current austerity measures only (especially with the increase of oil heating<br />prices).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-27676128981201478552018-01-16T14:59:33.283+01:002018-01-16T14:59:33.283+01:00- An estimated 20% of fuel oil sold in the Greek m...- An estimated 20% of fuel oil sold in the Greek market, according to this research, comes from<br />illegal trade. Petrol stations in Greece are said to offer fuel that is a more lucrative blend of<br />legally purchased fuel and black market fuel, enabling retailers to make higher profits and to<br />avoid excise duties. Often, the transport fuel oil is diluted with heating or shipping fuel oil.<br />Shipping fuel oil is not subject to excise duty as opposed to the fuel oil for passenger and freight<br />cars (Alic 10.4.2012).<br />- Fuel smuggling can flourish in different ways. This can be exemplified by a case revealed<br />several years ago, according to which a Bulgarian tanker had to fuel from a Greek refinery4<br />.<br />Market analysts crosschecked the data on the export oil volume and diesel to Bulgaria, Albania,<br />FYROM and Turkey. They required the same countries to submit data on the importation of the<br />same type of fuel from Greece. The results noted important deviations between the data on the<br />Greek exportation to Bulgaria and the data concerning importation from Greece (Mindova<br />04.10.2012). Thus, the reliability of the data provided is more than questionable.Anonymousnoreply@blogger.com